What is this calculator?
This calculator turns a cost and a selling price into gross profit, profit margin, and markup. Margin and markup describe the same profit against different bases, and confusing them is one of the most common pricing errors.
Use it when:
- You are setting a price and need to know the resulting margin.
- You have a target margin and want to check whether the current price achieves it.
- Someone has quoted a "markup" and you need the equivalent margin, or the reverse.
Intended for: Sellers, freelancers, and small businesses pricing goods or services.
How is this calculated?
- Gross profit is the selling price minus the cost — the money left before overheads.
- Profit margin expresses that profit as a percentage of the SELLING PRICE. It answers: of every unit of revenue, how much is profit? It can never exceed 100%.
- Markup expresses the same profit as a percentage of the COST. It answers: by how much did you mark the cost up? It has no upper bound.
- Because the two use different denominators, the same profit produces two different percentages — a 50% markup is a 33.3% margin.
Formulas
Gross profit
Profit = Revenue − Cost
The absolute money made on the sale, before overheads and taxes.
Profit margin
Margin % = (Revenue − Cost) / Revenue × 100
Profit as a share of the selling price. Undefined when revenue is zero.
Markup
Markup % = (Revenue − Cost) / Cost × 100
Profit as a share of the cost. Undefined when cost is zero.
Example
An item that costs 600 and sells for 900.
- Gross profit is 900 − 600 = 300.
- Margin is 300 ÷ 900 = 33.33%.
- Markup is 300 ÷ 600 = 50%.
Result: Gross profit 300, profit margin 33.33%, markup 50% — the same profit, two bases.
Frequently asked questions
What is the difference between margin and markup?
Both measure the same profit. Margin divides it by the selling price; markup divides it by the cost. Markup is always the larger number, and quoting one when you mean the other systematically under- or over-prices your product.
Can profit margin be more than 100%?
No. Margin is a share of revenue, so it approaches 100% only as cost approaches zero. Markup, which is a share of cost, has no such ceiling.
Is this net profit?
No. This is gross profit — revenue minus the direct cost of the item. Rent, salaries, marketing, and taxes are not deducted, so net profit will be lower.
Assumptions
What this calculator takes as given:
- The cost you enter is the full direct cost of the item sold.
- The revenue you enter is the price actually received, after any discount.
Limitations
What this calculator cannot know or does not model:
- Overheads, operating expenses, and taxes are not deducted — this is gross, not net, profit.
- Volume, returns, and shrinkage are not modelled.
- Margin is undefined at zero revenue and markup is undefined at zero cost; the calculator reports these as unavailable rather than guessing.